Tips for Realtors

items ‘left at the convenience of the Seller’

Posted in Tips for Realtors by Nancy W. Saia on November 20, 2018

With the most recent change to the BNAR/BAEC Contract effective in March, we eliminated the need to add in any language that says something like: “…which are left at the convenience of the Seller at no monetary value.” Actually, using that language is dangerous and should be avoided. The reason it had been added in the past was to satisfy the lenders. Of course, lenders do not want there to be value attributed to personal property because they cannot lend on personal property. They can only lend on real property. So, if $10,000.00 of the Purchase Price is attributable to appliances, the lender would have to reduce the appraisal value by the $10,000.00 and thereby, reduce the amount of their loan. No one wants that!

The dangerous part of that “…which are left at the convenience of the Seller at no monetary value” language is that it potentially eliminates the Purchaser’s claim at a Final Inspection that an Included Item is no longer present or no longer works. Let’s say that Paragraph 3(E)(4) is completed with “refrigerator, stove, washer and dryer” and Paragraph 3(E)(4)(a) is selected requiring that the Included Items be “in substantially the same condition as of the date of the Property Inspection…” Obviously, the Purchaser has an expectation that the listed appliances will be in working order at the time of the Final Inspection, as they were working fine at the Property Inspection. However, if the Selling Agent writes in “…which are left at the convenience of the Seller at no monetary value” after the list of appliances, what happens if the refrigerator does not work at the Final Inspection? A smart Seller’s attorney is going to say: “The refrigerator was just left for the convenience of the Seller and it has no monetary value. The Purchaser already agreed to that, and in fact, it was the Purchaser’s agent who added that language to the Contract. The Seller owes the Purchaser nothing for that broken refrigerator and the Seller is just leaving it there for the Purchaser to haul away.”

With this potential mess in mind, we amended Paragraph 3(E)(4) with this latest Contract revision to satisfy the lenders and yet retain the requirement that the Included Items be delivered at Closing “in substantially the same condition as of the date of the Property Inspection…” Our new Contract version added the following language after the lines for any additional items to be added in Paragraph 3(E)(4), “which are included with no increase in the Purchase Price and which nevertheless must be left:” in the condition negotiated by the Parties by selecting either (a) or (b). See the new language highlighted below:

So, it is no longer necessary nor desired to add after the list of included appliances, “…which are left at the convenience of the Seller at no monetary value.” Doing so could be a disservice to your Purchasers.

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The Hero Agent at Listing

Posted in Tips for Realtors by Nancy W. Saia on October 30, 2018

In my recent Realtor Tips, I have talked about “The Hero Agent”- the Agent who does all the right things to be a Hero to his or her customers. In the next series of my Tips, you will learn more about how to be The Hero Agent!

What better place to start than at the Listing appointment? I realize that there is a great deal to do at the Listing appointment and that, honestly, most Sellers just want to know why their house is not worth more money. Nevertheless, and especially in this hot Seller’s market, we need our Sellers to be informed and to be prepared. The Hero Agent does both!

Being a Hero to your Sellers can be pretty easy. What do Sellers hate the most? They hate delays and they hate losing money. The biggest delay in closing is if the title work does not get done on time. This delay is primarily a function of the Sellers not having their old Title Search and their old Survey available. You see, “searching” is a long and tedious process. The more years that have to be searched, the harder the process is and the longer it takes to make a new Search. It is much easier, faster and cheaper to update the Title Search from the date the Sellers bought the Property, than to start back at 1920 which our county requires. As a result, creating a new Search is very expensive – about $900.00! When faced with this large expense, Sellers will often move heaven and earth looking for their old Search before they will allow their attorney to order a new one from scratch.

The Hero Agent knows this and makes the Seller locate the old Search and the old Survey right at the Listing appointment. It’s not a bad idea to have them locate their deed and tax receipts too. The Seller is now prepared to sell and a tremendous amount of delay can be avoided. If the Seller cannot find their old Search at the Listing, at least you got them started looking. Safe deposit boxes, file cabinets, and the pile of papers from their purchase closing are good places to look. If they have no luck, have them call the new attorney they will be using to help in the hunt. Lately we have found that the search companies are terribly behind in sending out the updated searches after closing. We just found a Search sitting with the searcher since 2009! Years ago, some attorneys also held searches in an attempt to force the clients to come back to them for the sale. In any event, we know the clues to follow to help find the old Search. Start the process early and be The Hero Agent who saves the Seller hundreds of dollars and weeks of wasted time!

You can also be a Hero by just giving the Seller a couple of pointers at Listing. Help avoid confusion by letting the Seller know up front what is expected of them through the day of Closing. The Hero Agent at Listing, has the Seller:

  • Read Paragraphs 3(D) and (E) so they know what items are supposed to remain at the Property and those items that can be removed. There is nothing more frustrating to a Seller than to learn too late that they cannot take their brand new custom curtain rods. Avoid misunderstandings by having them read those paragraphs in advance. If there are Included Items that the Seller wants to keep, then you can exclude those items in Paragraph 3(F) and you’ll be a Hero to your Seller.
  • Understand that the Sellers are responsible for lawn and landscaping maintenance right through the day of Closing and for any snow and ice removal as well.
  • Keep everything in the same condition it is in when the house looks its best at the showings. When the Sellers leave, no damage can occur and the house has to be cleaned. The Contract and common courtesy dictate that ALL of the Seller’s belongings and trash be removed for Closing.
  • Complete all questions of the PCDS, including the last part of question #28. The Hero Agent knows that the Seller can be held liable for repairs or replacements if the Seller fails to answer all questions on the form honestly and watches over the Seller to be sure that all questions are properly answered.
  • Pay attention to the weather. We all love the change of seasons here in Western New York, but our weather poses some unique real estate issues. The Hero Agent thinks about the weather for every sale. Does the house have a septic system? If it is likely that the Closing will take place in the winter months (October – April) when the ground could be frozen, septic systems cannot be tested. If the septic system cannot be tested, expect that the Purchaser or the Purchaser’s lender will require that the Seller place enough money in escrow to cover the cost of a replacement septic system. This is often $10-15,000.00! However, the Hero Agent will have the Seller get the septic system tested right away at Listing if there is time. This will save the Seller losing a large portion of their proceeds to this escrow as the test results are good for 6 months. The Seller will then have the money they need to buy their next house and the Agent is really a Hero! If the ground is already frozen when the Seller first calls you, The Hero Agent at least explains the escrow and prepares the Seller for the reality of not receiving all of their money at the Closing. The Seller then has no misconceptions about the amount of proceeds they will have available to buy their next house. The Hero Agent applies the same concepts if the house has a pool, hot tub, or air conditioning. These seasonal facilities cannot be tested or inspected if the temperatures are too cold. As a result, the Purchaser will want an escrow to assure that these systems are in good working order. The Hero Agent will guide the Seller to have the pool company inspect the pool before it is closed for the season and to have an HVAC contractor service and inspect the air conditioning. It is very useful at the negotiations to have letters from these contractors so you, The Hero Agent, can avoid escrows at Closing.

 

More on the LBPR…new BNAR Lead Based Paint Disclosure Form

Posted in Tips for Realtors by Nancy W. Saia on June 13, 2018

Shortly after I completed my last Realtor Tip on the topic of how to handle the Lead Paint Disclosures at Listing, your BNAR finalized the Disclosure form that they will now make available as part of your Listing Package. That form is linked at the end of this Tip.

The new Lead Paint Disclosure form is combined with the new language for the Paragraph 6 Disclosures. I also really like how it brings in the Pre/Post 1978 Construction question so you have the information to complete Paragraph 8 and know whether or not you even need to draft a LBPR when you prepare the Contract. That document is linked from this Tip. Great job BNAR!

In reply to my last Tip, a number of you asked about what to do with the PCDS that had been signed by the Seller at Listing. The question was whether or not the Seller had to re-sign the PCDS when the Seller signed the Contract. My first caveat is that the Seller must give the Purchaser notice of any change to any answers on the PCDS. So, if there is a change in any answer on the PCDS, the Seller must at the very least change that answer and initial and date the change.

However, it is not necessary to have a new PCDS signed with every Contract. The law that created the PCDS is clear that the Seller must only give the Purchaser a “copy” of the completed PCDS and that the Purchaser need only sign a “copy” of the PCDS the Seller completed. So, unlike the LBPR that has to be created anew, the Purchaser can sign a copy of the PCDS the Seller prepared at Listing.

Paragraph 6 & LBP Disclosure Form

Do What with the Lead Based Paint Rider?

Posted in Tips for Realtors by Nancy W. Saia on March 27, 2018

Recently, we have learned how Agents have been completing the Lead Based Paint Rider (“LBPR”) and realized that we needed to fix a little part of that practice.

As I understand it, most Agents have the LBPR signed by the Seller at Listing and then upload that form onto the MLS for Purchaser Agents to reference if their customer chooses to submit a Contract. BUT then, the Selling Agent uses that scanned LBPR for the Contract and has the Purchaser sign it. Many Agents do not even fill in the top of the LBPR and almost none have the Seller re-sign the LBPR. However, using a form that is not an original is not proper for a Contract. I know that is revolutionary, but you should not use the uploaded LBPR for the Contract!

What, you say!? Again, the LBPR that you attach to the Contract should not be the one that the Seller signed at Listing and was uploaded to the MLS unless you properly modify it.

What then is the Selling Agent to do? Let me first give you some background. Years ago, when the Lead Based Paint Regulations were first instituted, I was personally charged with contacting the EPA counsel to discuss implementation of our Contract form. I had several telephone conferences initially and again later after we had drafted our LBPR form. The general rule from the Regulations is that prior to entering into a Contract to buy a Property, the Purchaser has to be told whether or not the Seller knows of any lead-based paint hazards and, if the Seller does know of any such hazards, whether or not the Seller has any reports about those hazards.

The reason the LBPR is signed at Listing and is uploaded onto the MLS is so these two critical disclosures can be provided to the Purchaser before the Contract is signed as is required by the Regulations. The Regulations require that the LBPR be prepared based on information previously provided by the Seller. However, it is not intended that the uploaded LBPR become a part of the Contract. In fact, Contract Law tells us that all components of the Contract have to be signed by both Parties with the intent to be part of a Contract. So, using a LBPR signed by the Seller before the Seller even knew the identity of the Purchaser and which has no connection to a specific transaction, does not make that form a legal part of a Contract.

The only way to use the LBPR that was downloaded from the MLS is if that form is completed at the top AND the Seller signs and initials it again when the Seller signs the rest of the Contract. The other (and easier) option is simply to prepare a new LBPR when you prepare the rest of the Contract using the disclosures made by the Seller on that uploaded LBPR form. The LBPR is then complete according to Contract Law and is still prepared according to the Regulations as it was prepared “based on information previously provided by the Seller.” That’s exactly why we have Paragraph LBPR4(C) which reads: “This Rider was prepared based upon information previously provided by Seller either verbally or as part of Seller’s listing information”. This language came directly from the EPA after they reviewed our local form and practice.

In an effort to eliminate any confusion, we have now created a Lead Based Paint Disclosure form for BNAR that Sellers can sign at Listing. This form is just a disclosure and should be uploaded to the MLS to provide the required information to the Purchaser so a LBPR can be properly prepared “based on information previously provided by the Seller.”

Just as a reminder, the same Contract Law applies to any other Rider too. Any Riders that have been uploaded to the MLS are just there for disclosure. New Riders should be prepared as part of the new Contract preparation.

The Non-Obligated Owner

Posted in Tips for Realtors by Nancy W. Saia on June 6, 2017

Very often we find ourselves in the situation where one of the Purchasers does not have good credit or maybe just does not have any credit. In that case, the lender wants just one of the Purchasers on the loan. The problem with this scenario is that having title in just one of the couple in title upends the estate plan for the couple. Having both owners on the Deed is a simple and cheap estate-planning tool.

There are three (3) ways the multiple owners can own real property. The first is the most common that we see. It is as “Tenants by the Entirety”. This type of ownership is only for married couples. When a married couple holds title to real property, they are automatically Tenants by the Entirety (even if the Deed does not say so). New York State Law protects married couples even if someone forgot to write the proper words on the Deed. This designation can be made by naming the couple as “tenants by the entirety” or as “husband and wife”, as “wife and husband”, or as “a married couple”. Anything that states that the couple is married is sufficient. Of course, same-sex couples are offered the same protections under New York State Law. If the couple is married and there is nothing listed on the Deed, the marriage can be proven at any time verifying the Tenancy by the Entirety.

A Tenancy by the Entirety means that if one of the married couple dies, the real property automatically passes to the surviving spouse. No further action is required for the survivor to own the full property. The surviving spouse does not have to bring any action for probate or administration, nor does he or she have to even record a new Deed. The property just automatically belongs to the surviving spouse when the other spouse dies.

As you can imagine, this is a huge savings for the surviving spouse. What could be easier than having to do nothing at all to inherit the full house? And…creating the Tenancy by the Entirety is super easy. All that has to be done is to record the Deed with both spouses listed as owners.

Non-married couples can create a similar type of ownership, but for them it is called a “Joint Tenancy”. With this type of ownership, the surviving Joint Tenant will automatically inherit the full ownership of the real property when the other Joint Tenant dies. For non-married couples, or even multiples unmarried parties, the only way to create this type of ownership is to specifically name them as “Joint Tenants” on the Deed. Sometimes we add the language “with rights of survivorship” for further clarity, but upon the death of a Joint Tenant, title passed automatically to the surviving Joint Tenant(s). This, too, is a powerful and very easy estate-planning tool.

If unmarried persons own real property and there is no designation on the Deed that they are Joint Tenants, they are automatically “Tenants in Common”. Interestingly, married couples who divorce while owning real property, automatically become Tenants in Common once the divorce if final. Of course, this designation of “Tenants in Common” can also be written in on the Deed to clarify what happens in the event of the death of one of the owners.

When a Tenant in Common dies, the other owners do not automatically acquire any additional interest in the property. Instead, the deceased person’s share passes to his or her estate. If that person has a Will, that share of the property will pass as designated in the Will. If there is no Will, New York State has a list to determine who inherits that share of the property. Imagine the mess that can create if the deceased person’s distant relatives now become owners of the property. A proceeding in Surrogate’s Court absolutely must be brought in order to transfer that deceased person’s share.

Finally, if one person owns the real property in his or her name alone, just like the deceased Tenant in Common, a full estate proceeding in Surrogate’s Court has to be brought to transfer that property. There is no other way to give title to someone else. This can be time-consuming, contentious and expensive.

Why have I gone on and on about estate-planning? I wanted to explain how easy the three (3) simple Deed designations can be. For absolutely not a penny of extra money when a couple is first buying a house, we can accomplish this very effective estate-planning for them. We can save them thousands of dollars if one owner or the sole owner dies.

So, if a loan officer says that it is better to only have one of the couple on the mortgage loan and thus, only that one person on the Contract and in title, we need to step back and try to get the lender to allow the other co-owner to be listed on the Deed and to be a “non-obligated owner” on the mortgage. This means that we can have the other person on the Deed (in any of the 3 capacities we want), but that person’s credit is not considered at all for the mortgage loan.

The loan officer may tell you (and your customers) that they can simply do a Deed after closing to add the other person into title, but preparing and recording a Deed is expensive these days. It costs about $200.00 just in recording fees. Of course, there are legal fees to be paid and more importantly, people just forget to do this after closing. Once they close, they are too busy painting, decorating, moving, etc. to think about seeing their lawyer to make a new Deed. Frankly, they are tired of all the hassle of buying the house, now they just want to enjoy their new home. So, people forget or procrastinate and title remains in the name of just one of them. If that person dies before the new Deed has been done and recorded, we just needlessly cost the survivor thousands of dollars.

Be the hero for your customers…remember the option of being a “non-obligated owner”. Not all lenders and not all loan programs will permit this option, but the informed and sophisticated Realtor should always ask and try to protect the Purchasers.

Condo Documents Needed Before Sale

Posted in Tips for Realtors by Nancy W. Saia on May 2, 2017

Because condominium living is so different than owning a stand-alone home, it is necessary for the Seller to provide the Purchaser with certain documentation prior to the Purchaser signing the Contract or shortly thereafter. The entire Contract is contingent upon the Purchaser receiving, reviewing and approving these documents. The idea is that, before the Purchaser is fully obligated to buy this new condo, we want the Purchaser to understand exactly what constraints there are on what can be done with the Property. We also want the Purchaser to know up-front the financial state of the condo association.

Condo rules cover a wise range of topics, including pets, window treatments, permissible vehicles, fences, pools, hot tubs, fire pits, etc. Any prospective condo Purchaser should know what can and cannot be added to the Property before an offer is even considered.

That’s why Paragraph CHAR3(A) was created. This clause requires the Seller to deliver certain documents to the Purchaser immediately, but no later than 10 days after the Effective Date. In a perfect world, these would be given to the Purchaser before they sign the Contract. The required documents are:

  • The Declaration and all Amendments to the Declaration;
  • The By-Laws;
  • The Current Rules and Regulations;
  • A Current Financial Statement; and
  • A Certification from the Management Agent verifying that there are no Special Assessments under consideration.

The Purchaser has 5 Business Days after receipt of these “Organization Documents” to cancel the Contract if the Purchaser is not satisfied with anything in these materials. Remember, that if delivery of any of these documents is delayed, the Purchaser retains the right to cancel the Contract until 5 Business Days after the last of these items is actually delivered.

Why would we want to allow a Purchaser to cancel after you have done all of the work of finding this Property and preparing the Contract? Doesn’t it make better sense to have these documents on the MLS system or at least available to a prospective Purchaser when they look at the Property?

These are not the same documents that the attorneys have to provide prior to Closing. The Seller’s attorney has to order and obtain documents that have to be dated after the Contract is signed. The attorneys must obtain:

  • An Architectural Compliance Certificate wherein the Association verifies that the Property has been inspected and no violations of the Declaration and Rules have been found;
  • A current Assessment Certificate that certifies that the Assessments for this Unit have been paid to and including the month of Closing;
  • An Affidavit that there have been no changes (amendments) to the Declaration and By-Laws except for those disclosed;
  • An Affidavit that there have been no changes to the filed survey for the condo (this does not apply if the condo Unit includes land, for example, a patio home, where the Seller must provide a new survey.); and
  • If there are Special Assessments, a statement from the Association as to when the Special Assessment was approved, when the installment payments are due, and which installment payments have already been made.

The materials the attorneys obtain all relate to title issues and, if there are problems with any of them, the Contract has built-in mechanisms to cure the defects. However, with the Organization Documents that are to be given to the Purchaser at the beginning of the transaction, we have determined that these issues are so vital to the Purchaser’s ownership, that we gave the Purchaser the right to cancel the Contract if the Purchaser does not like anything in those documents.

In my Tips, I like to talk about the “Hero Agent”. This is the agent who knows his or her business so well, that he or she is prepared and saves customers from avoidable disappointment. This is one of those times when you can easily be the Hero Agent. As Listing Agent, you should start working on the Organization Documents the day you list the condo for sale. The original “Offering Plan” for the condo development has the Declaration and the By-Laws built right in that binder. It does not have the Amendments to the Declaration, the Rules and Regulations, a current financial statement, or the certification that there are no Special Assessments under consideration. The Seller may have the Amendments to the Declaration, a copy of the Rules and Regulations, and maybe even a current financial statement. The certification regarding any Special Assessments under consideration and any documents the Seller does not have, can be obtained by the management company for the Association. There may be a cost for these documents, so you should have the Seller contact the management company directly to determine the cost and arrange delivery. Obtain whichever of these Organization Documents that you can at the listing meeting and then chase the rest of them as soon as possible. Have them available for interested buyers.

If you are the Selling Agent, you too can be a Hero Agent! Ask for these items for your condo buyers. Make sure that there are no Special Assessment under consideration. This is different than Special Assessments that have already been approved. The Seller would know about those that had already been approved, but if the Seller does not follow the Board minutes carefully, the Seller might not know that a Special Assessment is being considered by the Board. How awful is it for a new Purchaser to learn that the Condo Board has spent the last year working on a Special Assessment that is just approved right after Closing?

I realize that many agents will think these are new requirements, but they are not. They have been with us many, many years, but I fear they have been ignored. Our condominium Boards are changing the Rules more frequently these days, many are instituting rules that prohibit renting, and some are approving major Special Assessments. The Purchaser has the right to know about all of these issues before they commit to buy.

New Rules For Mold Remediation

Posted in Tips for Realtors by Nancy W. Saia on April 4, 2017

Evidence of mold in the attic is a fairly common element of many home inspection reports in Western New York. Over the years, the methods used for mold remediation have varied from the home-grown method of spraying bleach to very professional. There have been no guidelines. No rules, no way of knowing what a Seller had to do and who could do it.

All of this changed recently and now we have very specific, very detailed rules, and an exact procedure for every mold remediation project. The NYS Legislature undertook the task of controlling the mold remediation industry and amended the NYS Labor Law to create a specific procedure that has to be followed in every circumstance where mold is to be removed.

Any time mold is found, this three-step process must be followed.

First, an initial assessment of the material found must be tested and analyzed by a company licensed by the Dept. of Labor and that company must create a mold remediation plan specific to this mold remediation project. The company that does this assessment is called the “mold assessment licensee“.

Second, based on those findings of the mold assessment licensee, a different company also licensed by the Dept. of Labor called a “mold remediation licensee“, must create a “work plan” and then must complete the remediation work set forth in that work plan. The work plan must provide specific instructions and/or standard operating procedures for how the mold remediation project will be completed and must be given to the homeowner before work starts.

Third, in order for the remediated project to achieve clearance, the mold assessment licensee must come back and re-test the remediated area to be sure that all of the mold has been properly removed and that all work was completed in accordance with the remediation plan and the work plan.

It is critical that all of these steps are followed in every circumstance. The law does not permit any variation from this process. So, if the home inspector finds mold and the Seller proposes some remediation that does not include an estimate from 2 separate companies for these 3 steps, do not accept it. It is a violation for the contractor to do anything less than what is required and this requirement cannot be waived.

Simultaneous Buy/Sell

Posted in Tips for Realtors by Nancy W. Saia on March 10, 2017

Be the hero when your customers are selling and buying at the same time.

It’s so nice to know that with one set of customers, you can earn two (2) commissions! You listed their house for sale and you found them their new dream home. They love you and think you are the best Realtor ever…until closing day. The same thing happens to attorneys, so I know whereof I speak.

As we all know, closing dates are fairly fluid in Western New York. Now with TRID, they are even less predictable. So, for people who have to have their old house packed by movers, then have to drive somewhere to sign a bunch of documents for their sale, then sign a 2 inch stack of mortgage papers, wait for the search companies to run the county records one last time, wait for their keys, drive home, and then get to the new house to meet the movers to unload before the movers start charging extra for sitting around waiting, coordinating 2 closings in one day and actually making this all work, is daunting and painful, if not impossible.

That’s why whenever we see clients who are selling and also buying at the same time, we first tell them to practice their good humor and we see if it is possible to negotiate a couple or a few days of post-closing occupancy in the house that they are selling. If the house that they are buying is or will be vacant in advance of closing, early occupancy in that new house should also be explored.

Closing and moving is stressful and hard. If there is a way to make this easier on our customers, we should do so. Also, the timing of closings is like herding cats. The moment you get a cleared to close on one deal, the other one has a title issue. Getting every part of the deal in the same place at the same time is often miraculous.

So, my “Hero Agent” knows better and thinks about all of this right at the beginning and negotiates the post-closing occupancy or early occupancy. It makes much better sense to do this right at the Contract stage when everyone is motivated to make the deal. Buyers and Sellers are much more cooperative at that time.

Luckily, there is language on the Instanet/Transaction Desk Program that you can use for this in Paragraph 20. You can establish the daily rent and the amount of the Security Deposit. Again, people are much more cooperative at this juncture. Negotiate everything at the same time. Here is the link to all of the clauses that are already pre-set on the Contract program. You may want to print out the list to have just in case you have to hand-write any clause. If there is language that you need that is not covered by this list, you can always call me for suggested wording. I am happy to help.

A Condo or Not a Condo? That is the question.

Posted in Tips for Realtors by Nancy W. Saia on April 12, 2016

Trying to determine if a Property is a Condo or if it has “an interest in a homeowner’s association” confuses everyone. If you ever had to complete Paragraphs 3(B) and CHAR1, you know that uncertain feeling. Let me help eliminate that confusion for you.

The language of Paragraph 3(B) is admittedly convoluted. It reads:

(B) Additional Description.

□ Per attached map/survey map. □ Per attached legal description □ Approximate Lot Size: ________

□ Includes interest in a homeowner’s association: See Condominium/Homeowner’s Association Rider

□ Condominium Unit: See Condominium/Homeowner’s Association Rider

Of the last two (2) check boxes, the first option is for what we traditionally called a Townhouse or a Planned Unit Development (PUD). This option says the Property “includes an interest in a homeowner’s association.” The last box is for a Condominium. Most Realtors think that for a Condo, they should check both boxes because condos have homeowner’s associations. That is actually not true.

If a person owns Property that “includes an interest in a homeowner’s association”, that person owns the land their building sits on and is a member (by virtue of the recorded Declaration) of the Homeowner’s Association. The Homeowner’s Association owns all of the common areas.

A condominium is a type of ownership where the homeowner owns the “Unit”, as that word is defined in the recorded Declaration, and also owns a set percentage interest in all of the rest of the lands of the development. There is a Condominium Association, but that is just a governing body. The Condominium Association does not own anything at all. So, with condominium ownership, there is not an “interest” in a homeowner’s association.

How do you know whether a Property is a condo or includes an interest in a homeowner’s association? The only way to really know for sure is to look at the deed. If the deed’s legal description lists a Unit number and a percentage interest ownership in the common areas, it is a Condo. (See the condo deed example). For a Condo, check the box in Paragraph 3(B) that says:

□ Condominium Unit: See Condominium/Homeowner’s Association Rider

If there is a Homeowner’s Association and the legal description on the deed does not list a Unit number and percentage interest, the Property just has an interest in a homeowner’s association. Check the box in Paragraph 3(B) that says:

□ Includes interest in a homeowner’s association: See Condominium/Homeowner’s Association Rider

To help you further, we have a list of Condos and PUDs on our website. While the list is not exhaustive, it should help make your Contracts more precise and eliminate confusion. Hamlet would be proud.

How to Help Your Deal Close in the World of TRID

Posted in Tips for Realtors by Nancy W. Saia on December 8, 2015

Now that we are dealing with the practical effects of the new TRID regulations, we are finding that we have less time to do what we need to do for the lenders.  If we are not pro-active, closings will be more difficult to coordinate, families will have a harder time moving when they want, and we will all face more last-minute closing hassles.

There is something you can do!

The hints that follow may seem simple and obvious, but you would be surprised how often they are overlooked.  Honestly, in the TRID era, every day is critical and your help with these simple tasks will help move us all to successful, timely closings.

  • At the Listing, have the Sellers find their search, survey and deed.  It amazes me when clients tell me that they have already signed a Contract to sell their home, but have not yet looked for their title documents.  Once I tell these clients that the cost of a new title search is about $900.00, they want to take even more time to look for that document.  This should be done as soon as the Listing is taken.  Have this conversation when you sign the Listing Agreement. These days, a lost search can be a disaster.  Know what a search looks like and (strongly) encourage the Sellers to find it well before a Contract is signed.  The superior Realtor creates prepared Sellers.
  • As soon as the Deposit is received, send the Commission Statement to the Seller’s attorney. You’d be surprised how often we have to chase this statement at the last minute when we are preparing our closing statement.  Now we have to prepare closing statements almost 2 weeks in advance of closing.  If we do not have the Commission Statement, the closing is delayed.  Again, this is a simple step that can help move along the process.
  • Deliver the PINA and every Addendum to both attorneys and the Bank.  It’s important for the attorneys to know about any credits, price changes, etc.  By the same token, banking laws require that the lenders also have all of this information.  It can be bank fraud if any changes to the Contract are not disclosed to the lender.  Some agents intentionally do not give the lenders certain Addendums hoping that the bank will not know about a credit listed on that Addendum. However, we are obligated to show all credits on our closing statements.  Those closing statements have to go to the lender.  Once the lenders see the credit on the closing statement, they have to start all over again with their underwriting process – causing incredible delay.  It is actually best to get that information to the lender as soon as possible so we have time to address any problems before we are under the pressure of an impending closing date. Remember that no PINA or Addendum credits are allowed if the full Seller’s Concessions have already been used.  Also, the lenders often prefer the use of Seller’s Concessions instead of PINA credits.  If you have a transaction that has no Seller’s Concessions, but the Parties have agreed to a credit as a result of the Property Inspection, the lender may prefer to have a “clean” PINA and an Addendum that creates Seller’s Concessions in the amount of the agreed-upon credit.  Check with the loan officer.
  • Educate you buyers that there are some things that they cannot do when they are in the home-buying process.  For example, they should not change jobs and they should not incur new debt or open new charge cards.  These activities will affect the ability of the buyer to obtain the loan.
  • Encourage your buyers to promptly deliver all conditions to their loan processor.  Once the commitment comes out, review it in detail with the Purchasers and keep track of their progress on those conditions.

Hopefully, we can all work together to move these deals to closing faster and with fewer problems.